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Intero Insider: Is It a Good Time to Refinance?

By Gino Blefari | June 22nd, 2011 0 Comments

Despite doom-and-gloom reporting, not every homeowner in the U.S. has negative equity right now. And with interest rates still hovering near record lows, those with equity are likely asking themselves whether it’s a good time to refinance. Well, is it? Let’s take a look:

  • Average interest rates on 30-year fixed-rate mortgages fell to 4.51% a week ago (according to the Mortgage Bankers Association’s latest survey), the lowest level since last fall.
  • The average outstanding home loan carries an interest rate of about 6% (Freddie Mac’s Chief Economist Frank Nothaft told The New York Times last week).

So if you took advantage of low rates last fall or in 2009, you probably won’t see much savings by refinancing now. But if you haven’t yet refinanced since 2008, you might want to check in and see what kind of savings refinancing might afford you.

Cashing out: What’s enough equity?

Refinancing used to almost always mean the owner was taking some cash out in the process. That’s because values had climbed pretty steadily (and steeply in many areas) for several years in a row – so most homeowners could afford to cash out to maybe send their kid to college, work on a new addition to the house or remodel. But today, the story is much different.

Even if you have equity, it may not have climbed enough for cashing out to make sense. In fact, the NYT reports that some owners are even putting cash in to up the equity on their homes.

So what’s enough equity by today’s standards? Times have changed and 20% is once again a magic number. Many lenders aren’t even going to allow you to cash out if it means dipping below that.

Refinance options for the equity starved

OK, but what if  you have less than that? Can you still refinance to take advantage of low rates?

The good news is that there are some programs out there that may make this possible. If you have little or no equity, you can ask your lender about the Home Affordable Refinance Program. If you have an FHA loan, you can check out FHA Streamline Finance, which may make sense for you.

So even if your equity is pretty low, there are options. Point is, with rates this low, it’s a good time to sit down and discuss whether refinancing would improve your loan situation. We all know that rates are fleeting and what’s here today may be gone tomorrow.

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Intero Evergreen Valley Grand Opening

By Teressa Francis | June 17th, 2011 0 Comments

As a follow up to yesterday’s post on Intero Evergreen Valley Grand Opening, we would like to share the event’s success with you! Check out the video and photos from yesterday!

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The Multi-Family Opportunity

By Gino Blefari | April 12th, 2011 1 Comment

A silver lining to today’s dismal housing markets lies right in Newton’s third law of motion. This law states that every action has an equal and opposite reaction, and that’s exactly what’s happening in a lot of real estate markets right now.

The pace of homeownership slows, and the pace of rentals speeds up. There’s Newton’s law at play. But it actually runs even deeper.

As single-family home sales on average continue at a slow pace, alas, some markets are seeing faster growth in multifamily sales. And according to a recent article in Smart Money magazine, these aren’t your run-of-the-mill investor purchases. These are families or individuals who decided the rock-bottom prices of investment real estate are just too hard to pass by.

This is obviously great news for local economies and real estate markets. But it’s also great news for homeownership in general. We’ve seen the value of ownership being picked at by critics and money gurus like Suze Orman over the last few years (see my post, “Why Aspiring Homeowners Will Ignore Money Gurus“). The growth in multifamily activity and interest is a clear sign that Americans still value the notion of being homeowners and of being entrepreneurs.

Here’s why the growth of multifamily makes a lot of sense:

  • Multifamily properties present an opportunity for owners to earn extra income – something the recent recession has reminded us can be key to making it through rough patches of unemployment or economic hardship.
  • Rental markets are on fire. People have to live somewhere and for most Americans, that will mean either renting or owning a home. This is a positive statistic that multifamily investors are paying attention to.

I’m not one to sit here and hand out investment advice or even broad real estate advice. I think it’s all very personal and the answers and direction vary with each situation. Multifamily investing comes with its own set of problems and risks – you have to be a landlord, prices may not rise as quickly as you’d like, the rental market could soften again.

But if you’re in the market for a new home or on the fence or even just starting to think about how you can take advantage of today’s real estate market, check out the multifamily opportunity in your city. You may find some great bargains that you hadn’t previously considered. Then, next time a recession rolls around, you may find yourself with a few more options and a few more income streams.

If you’re interested in learning more about multifamily opportunities near you, ask an Intero agent where to start.

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Intero Insider: Younger Americans Still Keen on Homeownership

By Gino Blefari | March 1st, 2011 1 Comment

The housing market may not have the rosiest headlines in town, but there are some great things happening if you open up the hood and look closely. Here’s one:

Younger Americans still like the idea of owning a home. The 18- to 34-year-old demographic (also known as Generation Y) in a recent Fannie Mae survey said they believe buying a home has a lot of potential as an investment, despite their peers seeing the steepest decline in ownership during the housing decline.

In fact, this group, along with Hispanics and African-Americans were more positive about homeownership than any other Americans.

In the spirit of helping younger Americans bring their homeownership dreams to life, here are four pieces of advice for making it happen:

1. Start saving as early as you can. Banks have been more stringent with downpayment requirements and there are a number of initiatives in Congress right now that may end up increasing downpayment requirements even more.
2. Don’t wait too long. With interest rates low and supply levels high in many areas, now really is a great time to buy. However, many expect the loan process to get even harder and rates to increase this year so these conditions won’t last forever.
3. Think long-term. Real estate is for the long haul and much more difficult to unload than a stock portfolio. Figure out where you want to be in 5-10 years and then zero in on your real estate goals.
4. Find a Realtor you trust. Real estate is difficult – even for the most intelligent buyers out there. Having an agent you are comfortable working with is priceless when it comes to navigating the process and dealing with unexpected twists and turns.

It’s good to see that owning a home still holds prominence in the minds of young Americans. A lot of folks have speculated that this group would end up not valuing homeownership as much as their parents and grandparents because of the financial collapse, recession and rising cost of ownership compared to personal incomes.

I think it’s a sign that real estate is not and will never be dead.

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Intero Insider: Bay Area Home Sales Trend Up from Last Year

By Gino Blefari | February 23rd, 2011 0 Comments

Much of the housing news this week focused on a new finding that the number of home sales may have been overstated for the past few years by the National Association of Realtors, which closely monitors sales data. I’m here to tell you that this is not the important story of the week for those of us living and working in the Bay Area.

No, the important housing story for us is actually pretty fair news: Bay Area home sales were up in January compared to the same month a year ago. According to the real estate monitoring service DataQuick, 4,966 homes sold in early 2011, which was lower than December numbers but higher than January last year.

January and February typically are slow months for housing, and DataQuick pointed out that this makes it difficult to use these months as trend predictors. But a year-over-year increase is a good thing and could mean we are indeed seeing the beginning of that slow recovery we’ve all been talking about for 2011.

The fact that a home in my neighborhood just sold in less than three weeks also contributes to my optimism.

What else is new as we dig through the first set of numbers for 2011 in the Bay Area?

  • The median price for new and resale houses and condos decreased to $338,000 in January from $350,000 a year ago.
  • Higher-cost homes seem to still be seeing the affects of the credit crisis, which made adjustable-rate mortgages and “jumbo” loans more difficult to get. Jumbo loans accounted for 60% of the Bay Area home loan market more than three years ago, and accounted for only 27.1% of the market in January of this year.
  • Foreclosure activity remains high, but is below the peak levels reached two years ago, the report said.

Not stellar, but not a bad beginning to 2011.

As we work through the year, remember the importance of discovering the data in your local market. What’s being talked about at the national level in real estate very often has nothing to do with your home sale or purchase.

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Intero Insider: ‘Tis the Season for Home Buyers

By Gino Blefari | November 30th, 2010 0 Comments

It may be the best time of year for traditional retailers who find their bottom lines moving from red to black, but in the housing industry, sales tend to slow down when the yuletide rolls in. Nobody likes to move during the holidays, but if you’re in the market to buy and don’t mind the timing, you may actually have the best timing of all.

While a recent Fannie Mae survey shows more consumers are more negative now about buying a home, there are still plenty of folks looking for a house to own. And the great news is that deals abound!

Here are three things that home buyers have going for them this holiday season:

  • Inventory galore: The inventory of homes for sale of course depends on your market, but markets across the nation generally are experiencing high inventory levels. This is not exactly a great thing for the overall health and sustainability of the market and economy, but it is a good thing for those buyers who are ready to make a move.
  • Historically low interest rates: I can’t really stress this enough – the low rates we’re seeing on long-term mortgages are incredible! Forget about missing out on the home buyer tax credit earlier this year – these low rates will save you even more cash in the long run than any government incentive so far.
  • Relaxed competition: With high inventory comes less competition. Again, this isn’t great for home sellers or for sustaining values, but as a buyer you’ll find that you have more negotiating power. Use it wisely.

Here’s what this season’s buyers will need to watch out for:

  • Stellar credit gets the best deal: Sure, rates are incredibly low but you’ll need a solid credit score to get the best terms. You’ll also need a ton of documentation so it’s best to prepare that stuff ahead of time.
  • Cash needed: This is true now and pretty much always – more cash will enable you to get a better loan and make for an all-around better closing experience.
  • Local market conditions: Is your market still on the decline? That’s no reason to wait to buy, but it’s something you should take into account when making your offer.

Bargains abound at all the top stores across the nation. And this year, the “real estate” store is not much different. Buyers indeed have the upper hand in many neighborhoods. Don’t let the holidays derail your home hunt entirely – you may just miss the sale of the century! Talk to an Intero agent today about what’s available near you.

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Intero Insider: Cut the Mortgage-Interest Deduction Now? Say It Isn’t So

By Gino Blefari | November 23rd, 2010 1 Comment

The mortgage-interest deduction is the latest housing policy Congress is targeting for possible cuts that could have a deep effect on the nation’s housing recovery. For California, this feels a lot like a “kick us while we’re down” move by Congress.

Don’t panic yet, though. Talk is cheap and this is an issue that has come up before – each proposal getting nowhere. Let’s look at what’s happening here.

First, what is the mortgage-interest deduction? It’s part of the tax code that enables homeowners to deduct the interest they pay on their mortgage from their income tax bill each year. It provides a nice deduction for those in high-cost areas like California and is a significant incentive for home buyers as they know they can count on this deduction to help reduce their annual tax bill.

Sounds good, right? So why cut it?

The mortgage-interest deduction is the largest single subsidy for housing in the U.S. and is projected to reduce tax revenue by $131 billion in 2012. It’s easy to see why Congress would be interested in gaining back some of the revenue.

The proposal that sparked the whole discussion early in November would reduce the amount of mortgage debt on which a borrower could deduct interest paid from the current limit of $1 million to $500,000. Also, borrowers could no longer deduct interest paid on home-equity loans or on mortgages for vacation homes.

The upside is the immediate pool of revenue this would create for a Congress that’s dealing with major deficits. However, pulling it from the hands of homeowners is a pretty bad move that could seriously derail an already-slow housing recovery.

With more than 11 million U.S. households now holding a mortgage worth more than their home, according to CoreLogic, taking money from homeowners is an obvious bad idea. And even though the proposal is simply to lower the current cap, it’s still a pretty drastic move that would significantly impact different segments of the market.

Proponents of the cut argue that only higher-income homeowners actually benefit from the deduction because those in the middle or lower-end tend not to itemize deductions on their tax bills anyway – opting instead for the standard deduction. They say that high-cost states are the ones that would be most impacted by a move like this.

I say it all depends. Many times moves like this will do more damage by sheer perception than actual numbers. The government takes away one of the largest incentives for buying a home. That’s bound to crush more consumer confidence.

So please, Congress. Think before you act on this. Housing is a work horse in our national economy. Don’t make a hasty move in order to fix another problem.

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Intero Insider – 2011: Slow growth will end the decline

By Gino Blefari | November 17th, 2010 0 Comments

We are about to start a new year that will prove positive upward motion for both our state and local San Francisco Bay Area economy. We’re going to see some job growth, which will help to fuel initial growth in the housing recovery. But it’s going to be a slow start in 2011 – a year of transition is a good way to describe it – and we may not always feel like we’re making progress because of the slow speed.

Despite how slow or fast we’re moving, we are saying goodbye to the bottom and setting our sites on upward movement in 2011.

For housing, I expect to see a rise in sales volume and median prices in California in 2011 from our bottom year of 2010. I think a lot of buyers who’ve been waiting on the sidelines – either for a more secure employment situation or a signal of the market bottom – will finally move and buy.

We’ll continue to see high levels of foreclosures, but the market will continue to work through them.

In the Bay Area, there are a lot of developments that make me feel optimistic about 2011. Facebook game developer Zynga recently signed the largest lease for San Francisco office space in five years. Facebook itself recently announced a joint $250 million fund for social application developments. Stocks have been surging at Oracle, eBay, Google, Intel and other Silicon Valley tech powerhouses. And while sales volume has lagged, home prices in the Bay Area rose for 13 straight months through September, according to MDA Dataquick numbers.

These are all very positive signs that the Bay Area economy is already looking up, though we need to be mindful that miracles are not going to happen in 2011.

Here is what I am projecting:

Home buyers: Expect the loan process to be long and strict. You will need cash, a solid credit history, appropriate salary and job security. You won’t have the lowest of the low interest rates forever so you will come off the fence in droves in the spring of 2011. This rush may even surprise you as you find yourself competing for offers.

Home sellers: The folks at the California Association of Realtors have discussed the tale of two housing markets in our state: the high end versus the low end. How you come out in 2011 as a home seller really depends on which market segment you are in.

Sales of properties valued at less than $500,000 have largely been distressed properties and banks are expected to release more inventory next year. This means sellers of properties in this price range will continue to have a lot of competing inventory.

Meanwhile, sales at the high end – above $500,000 – have seen and will continue to see constraints from tightened lending.

The prognosis? It won’t be the best year to be a home seller in 2011, but be patient as there are buyers on the sidelines waiting to jump in.

Homeowners: Underwater owners are a wildcard in the forecast next year. I don’t see the trend of walking away from a mortgage ending completely, but hopefully some of the positive economic news will create a much needed sense of security for these folks.

The transition we need

We have a lot going for us in 2011. Our state’s sheer size of nearly 37 million residents, expansion of the exporting and technology sectors, and an expected rise in personal incomes are all factors we have working for us. We are still the eighth largest economy in the world with a gross domestic product of some $1.8 trillion.

It takes a lot to keep us down, and it will take a lot to pull us back to normal. 2011 won’t be remembered as a breakout year of growth, but it will be the year we turned the economy back around – the year we needed to transition from decline to moving up.

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Intero Insider: Good News for Employed AND Unemployed

By Gino Blefari | August 17th, 2010 0 Comments

In times of economic hardship, most news tends to focus on the bad stuff: unemployment, consumer spending, consumer confidence, slow economic growth. This may be why a recent economic story in The New York Times caught my eye: “For Those With Jobs, a Recession With Benefits.”

The headline says it all – the silver lining. It seems obvious, but for those lucky enough to still be employed, these are great times to be a consumer.

Just look at interest rates for mortgages. If you’re employed and looking to buy a house, you’re part of a group of borrowers who will lock in rates so low even buyers from a few months ago would cry. 4.375% percent (APR 4.579%) on a 30-year fixed!! That is something to brag about. Even an $8,000 home buyer tax credit cannot beat the savings achieved on these borrowing costs.

Further tipping the scales in favor of today’s employed are wages. According to the NYT article, “The typical jobless person has been out of work six months. The typical worker has received a raise.” Since the start of the recession in December 2007, real average hourly pay has risen nearly 5 percent.

This is obviously bad news for those who have been out of work for some time. But again, the bright side: Rising wages are good news for housing. And while the market may not see a huge pop from this right away, higher wages at least provide confidence for those buyers who are in the market today, and those sellers who are hoping for a match.

Remember: Every home sale needs just one qualified buyer. Your pool of buyers starts to increase with every job that is secured.

A lifeboat for unemployed homeowners

But even amid bad times for the jobless, there was some good news out of Washington last week. The Obama Administration is prepping $3 billion in financial assistance to aid homeowners in the states most affected by unemployment.

The assistance program will send $2 billion in aid to state Housing Finance Agencies for programs for borrowers who are struggling to make payments due to job loss. Another $1 billion in aid will come from the U.S. Department of Housing and Urban Development to provide up to 24 months of assistance to homeowners who are at risk of foreclosure.

So you see, it’s not all bad right now. Let’s hope it works!

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Intero Insider: Wait – I Still Owe What?

By Gino Blefari | April 21st, 2010 0 Comments

Each day, the news brings us tiny glimmers of hope that the economic woes that have turned the real estate market into a morass of unpalatable realities might just be behind us. Each day, however, there seem to be items served alongside those glimmers that give me pause.

These items, after making me take several deep breaths, have me advising my clients, customers, and Intero agents that patience will be the better part of valor when it comes to economic recovery.

We know that millions of Americans, and lots and lots of Californians among them, have lost their homes to foreclosure. Going through that process is more difficult than most people can possibly imagine. It’s a pride-swallowing siege that affects every aspect of your life. Once it’s done, however, it’s done and, typically, people can begin the process of rebuilding their lives.

Unless they can’t.

What if, after going through a foreclosure and having a mortgage discharged, you also have a second mortgage to pay? What then?

California is a non-recourse state. This means that any loan taken for the purpose of buying a home is discharged once a foreclosure has taken place. Debt collectors cannot pursue borrowers for loans in default that were used to purchase a home.

Loans that were taken for other purposes? Lenders can, and often do, do whatever it takes to collect what is owed.

If a second mortgage was taken and that money was used to help finance the purchase of a home, then it’s non-recourse debt. But often, banks and lenders won’t tell the borrowers that. There’s a loophole in the legal speak that governs such things that says that there’s nothing preventing the borrower from “voluntarily” repaying the debt. So lots of people who’re not under an obligation to repay find themselves on the receiving end of dunning calls and letters and struggling to make payments when and where they can.

If a second mortgage was taken and it was not used as part of a home purchase? Well, those monies are due and payable, regardless.

Whether lenders will try and collect is another matter altogether.

In California alone, almost $500 billion in home equity lines of credit (or other such loans) were taken out by homeowners. Banks are going to collect when and where they can. Sadly, a borrower’s personal net worth may be the deciding factor in their decision to pursue or not to pursue.

So, what are the options?

Well, one is to pay the debt if you’re able. If you can’t, my best advice would be to consult with an attorney to discuss your options.  You may find your attorney will tell you that a short sale would allow you to negotiate part or all of your deficiency away.  If this is the case, find a certified short sale agent within any of our offices to help guide you through the process.

There are options, but it’s best to explore them sooner, rather than later. If you have concerns relating to foreclosure or your ability to borrow money to purchase a home, please consult your Intero agent. The road to recovery is a tough one, but it can be ridden. We all just have to be patient.

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